Issues in Capital Budgeting
The debate regarding CFLs versus incandescent bulbs has even more wrinkles. In no particular order:
1. Incandescent bulbs generate a lot more heat than CFLs.
2. CFL prices will probably decline relative to incandescent bulbs.
3. CFLs unavoidably contain small amounts of mercury, a significant environmental hazard, and special precautions must be taken in disposing of burned-out units (and also in cleaning up a broken lamp). Currently, there is no agreed-upon way to recycle a CFL. Incandescent bulbs pose no disposal/breakage hazards.
4. Depending on a light’s location (or the number of lights), there can be a nontrivial cost to change bulbs (i.e., labor cost in a business).
5. Coal-fi red power generation accounts for a substantial portion of the mercury emissions in the U.S., though the emissions will drop sharply in the relatively near future.
6. Power generation accounts for a substantial portion of CO 2 emissions in the U.S.
7. CFL are more energy and material intensive to manufacture. On-site mercury contamination and worker safety are issues.
8. If you install a CFL in a permanent lighting fixture in a building, you will probably move long before the CFL burns out.
9. Another lighting technology based on light emitting diodes (LED) exists and is improving. LEDs are currently much more expensive than CFLs, but costs are coming down. LEDs last much longer than CFLs and use even less power. Plus, LEDs don’t contain mercury.
10. GE announced in 2007 a new technology: high efficiency incandescent (HEI) bulbs. These new bulbs dramatically cut energy use and will, according to GE, ultimately be comparable to CFLs. They are targeted for 2010 release, though the initial product will not be as efficient as a CFL. Qualitatively, how do these issues affect your position in the CFL versus incandescent light bulb debate? Australia recently proposed banning the sale of incandescent bulbs altogether, as has at least one state legislator (from California, of course). Does your analysis suggest such a move is wise? Are there other regulations short of an outright ban that make sense to you?